Securing tax is an amount that a payer withholds from a payment to a foreign partner — a taxpayer who is not a tax resident — and remits to the tax authority as an advance on that partner’s future tax. Both Slovakia and the Czech Republic use this mechanism, but the rate differs: Slovakia withholds 19% (up to 35% for non-cooperating states) under Section 44, while the Czech Republic withholds a general 10% under Section 38e. Both exempt residents of the EU and the EEA.
What securing tax is and why it exists
Securing tax is a safeguard that lets the state collect tax from non-resident taxpayers who earn income from domestic sources but might not file and pay the tax themselves. The law shifts part of the responsibility onto the local payer — the company or entrepreneur paying the non-resident — who withholds part of the payment and remits it to the tax authority. The withheld amount is not a final tax but an advance that secures the eventual collection.
In Slovakia the rule sits in Section 44 of Act No. 595/2003 Coll.; in the Czech Republic in Section 38e of Act No. 586/1992 Coll. In both countries the payer bears responsibility for correctly withholding and remitting the amount — if it is not withheld, the authority can pursue the payer directly, which ties into the broader question of a director’s liability for company debts and taxes. That is why cross-border payments to third countries need to be checked in advance.
The Slovak approach: 19% (or 35%) under Section 44
In Slovakia the standard rate of securing tax is 19% of the monetary payment. If the income is paid to a taxpayer of a non-cooperating state — one not on the list published by the Ministry of Finance — the rate rises to 35%. The payer must remit the secured amount by the 15th day of each month for the previous month and file a notification of the withholding and remittance within the same deadline.
Example: a Slovak company paying a €10,000 consulting fee to a supplier in a cooperating third country withholds €1,900 (19%) and pays out €8,100. The €1,900 is later credited against the non-resident’s actual Slovak tax once they file a return.
The Czech approach: a general 10% under Section 38e
In the Czech Republic the general rate of securing tax is 10% of the income from Czech sources. For certain special cases — such as non-resident partners in a general partnership or general partners in a limited partnership — the applicable income-tax rate is used instead. The payer must remit the secured amount by the end of the month following the month in which the obligation arose, and file a payer’s report within the same deadline.
Example: a Czech company paying a CZK 100,000 consulting fee to a supplier in a third country withholds CZK 10,000 (10%) and pays out CZK 90,000. The withheld amount is then credited against the non-resident’s actual Czech tax.
Who is exempt — EU and EEA residents
The most important exemption is identical in both countries: securing tax does not apply to taxpayers who are tax residents of an EU member state or the EEA. In practice this means the mechanism is relevant mainly for payments to third countries outside the EU and the EEA. Payments to partners in, say, Germany, Austria or Poland do not trigger securing tax in either Slovakia or the Czech Republic.
Before any larger payment abroad it is therefore essential to verify the partner’s tax residence, the nature of the income and any applicable double-taxation treaty, which may further modify or remove the obligation. The same cross-border diligence applies to VAT, which we cover in our guide on how to invoice abroad from a VAT perspective.
Securing tax vs final withholding tax
Securing tax is often confused with withholding tax, but they are different regimes. Final withholding tax (Section 43 in Slovakia, Section 36 in the Czech Republic) usually settles the tax definitively — the payer withholds it and the matter is closed. Securing tax (Section 44 / Section 38e) is only an advance: the non-resident can file a tax return in which the secured amount is credited against their actual tax, and any overpayment is refunded.
This distinction affects both sides. With final withholding the foreign partner is settled immediately; with securing tax the final liability is calculated only in the return, which may produce a refund.
Deadlines and how the secured amount is settled
The settlement logic is the same in both countries, but the deadlines differ. Slovakia requires remittance by the 15th of the following month; the Czech Republic by the end of the following month. In both cases the payer also files a notification or payer’s report. The secured amount works as an advance: the non-resident files a return, the amount is credited against the actual tax, and an overpayment is refunded.
Both systems also address a passive taxpayer. If the non-resident does not file, the tax authority may treat the secured amount as settling the liability — in the Czech Republic this happens automatically after a set period following the end of the tax period. Either way, securing tax fulfils its purpose even when the foreign partner remains inactive.
About to pay a partner in a third country and unsure whether to withhold securing tax in Slovakia or the Czech Republic? We will gladly assess the specific payment, check the relevant double-taxation treaty and set up the correct procedure.
FAQ
Does securing tax apply to payments within the EU?
No. In both Slovakia and the Czech Republic securing tax does not apply to taxpayers who are tax residents of an EU member state or the EEA. The obligation therefore arises mainly for payments to third countries outside the EU and the EEA. For intra-EU payments, other rules may apply, but securing tax under Section 44 or Section 38e is not among them.
What are the securing-tax rates in Slovakia and the Czech Republic?
Slovakia applies a standard rate of 19%, rising to 35% for payments to taxpayers of non-cooperating states. The Czech Republic applies a general rate of 10%, with the applicable income-tax rate used in certain special cases. Both are advances rather than final taxes, credited against the non-resident’s actual liability when they file a return.
Is securing tax the same as the final tax?
No. Securing tax is only an advance that safeguards collection. The non-resident files a tax return in which the secured amount is credited against the actual tax, and any overpayment is refunded. This differs from final withholding tax, which settles the liability definitively. If the non-resident does not file, the authority may ultimately treat the secured amount as settling the tax.